Court File and Parties

COURT FILE NO.: CV-17-587517

DATE: 20210423

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ROBERT LEONARD MARSHALL and TRACEY DOROTHY HOYT, Plaintiffs/Defendants by Counterclaim

AND:

JOHN PETER MEIRIK and AMBER MADELYNN MEIRIK, Defendants/Plaintiffs by Counterclaim

BEFORE: Kimmel J.

COUNSEL: Fred Tayar, for the Plaintiffs/Defendants by Counterclaim

Michael Bookman, for the Defendants/Plaintiffs by Counterclaim

READ: Written Costs Submissions dated March 25, April 9 and April 16, 2021

costs ENDORSEMENT (summary judgment and fresh evidence)

[1] The plaintiffs’ summary judgment motion originally came before me for hearing on July 17, 2019. In my initial endorsement dated October 28, 2019 (Marshall v. Meirik, 2019 ONSC 6215), the parties were afforded the opportunity to provide further expert (and other supporting) evidence and submissions, in accordance with directions provided, on the issues of damages and mitigation before I decided the summary judgment motion. Costs were also reserved.

[2] I determined that this was the most timely, cost effective and proportionate manner of proceeding. There were various delays but the parties eventually tendered further evidence through experts and made further submissions on these issues at a hearing held on January 14, 2021. In reasons for judgment dated March 8, 2021 (Marshall v. Meirik, 2021 ONSC 1687) I granted judgment in favour of the plaintiffs in the amount of $358,900.00, plus pre-judgment interest at the rate of 0.8% per year from November 30, 2017. I also dismissed the defendants’ counterclaim.

[3] After the second hearing on January 14, 2021, the defendants asked me to consider re-opening the evidentiary record and to grant them leave to tender further evidence on mitigation. After a further hearing that was convened at a case conference on February 25, 2021, this request was denied by me in an endorsement dated March 4, 2021 (see Marshall v. Meirik, 2021 ONSC 1615).

[4] At the request of the defendants’ counsel at the conclusion of the hearing on January 14, 2021, I agreed to allow counsel until February 19, 2021 to exchange their bills of costs/cost outlines and not to release my decision before then. That date was extended after the defendants asked to re-open the evidentiary record. Allowance was made in my March 4, 2021 endorsement for the parties to include in their bills of costs/cost outlines any claim for costs associated with the February 25, 2021 case conference and request for the court to consider granting leave for the filing of fresh evidence. I understand that bills of costs/costs outlines were exchanged on March 5, 2021.

[5] My March 8, 2021 reasons for judgment set a schedule for cost submissions which have now been received and considered by me.

[6] There is no dispute that the plaintiffs are entitled to costs, having been entirely successful in their claims. The issues for me to decide are the scale and quantum of those costs. This comes within the court’s discretion under Rule 57 and s. 131 of the Courts of Justice Act, R.S.O. 1990, c. 42 (“CJA”).

Positions of the Parties on Costs

[7] The plaintiffs are claiming their partial indemnity costs up to June 3, 2019 and substantial indemnity costs thereafter based on a June 3, 2019 settlement offer that they made for payment by the defendants of $315,000.000 plus pre-judgment interest pursuant to the CJA. This translates into a claim for costs of $138,059.10, inclusive of all fees (on the split scales, before and after June 3, 2019), disbursements and applicable taxes. Partial and substantial indemnity fees appear to have been calculated at 66% and 90% of counsels’ actual hourly rates, respectively.

[8] The defendants say that the total of their counsels’ fees were only in the range of $50,000.00 (they are not able to provide a definitive number due to lack of information from former counsel). They suggest an award of costs in the range of $50,000.00 and $70,000.00 (which is what they calculate the plaintiffs’ partial indemnity costs to be after some reduction in total lawyer hours) would be more consistent with their reasonable expectations and more proportionate. They further argue that the plaintiffs’ June 3, 2019 settlement offer was superseded by a settlement offer of $375,000.00 made on May 21, 2020 and that there is, thus, no operative settlement offer that should lead to the enhanced scale of substantial indemnity costs.

[9] In their reply cost submissions, the plaintiffs explain that the May 21, 2020 proposal was not a settlement offer but rather a suggested amount that could be recommended and that it did not revoke or withdraw the June 3, 2019 formal settlement offer. They also note that the $375,000.00 suggested amount was inclusive of damages, interest and costs and actually would have been more beneficial to the defendants if they had been willing to settle on that basis. The plaintiffs also argue that, in addition to bearing the onus as plaintiffs always do, they had to respond to many and various arguments that the defendants raised, through four different sets of counsel, in the course of the proceedings, including defences that were eventually abandoned and the attempt by the defendants to re-open the hearing for a third time.

Analysis

[10] Costs are within the discretion of the court to award under s. 131 of the CJA. The factors to consider in the exercise of that discretion are set out in Rule 57.01, including:

a. The principle of indemnity under 57.01(0.a), including the experience of the lawyer for the party entitled to costs as well as the rates charged and the hours spent by that lawyer;

b. Under Rule 57.01(0.b), the amount of costs that the unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

c. The amount at issue in the proceeding (Rule 57.01(a));

d. The complexity of the proceeding (Rule 57.01(c));

e. The importance of the issues (Rule 57.01(d));

f. The conduct of a party that unduly lengthened or complicated a proceeding (Rule 57.01(e), (f) and (g));

g. Any other matter relevant to the question of costs (Rule 57.01(i)).

[11] Partial indemnity costs are typically awarded in favour of a successful party. Rule 49 allows the court to consider settlement offers in determining whether an enhanced scale of substantial indemnity costs is warranted.

[12] The plaintiffs’ June 3, 2019 offer to settle was made in accordance with Rule 49. It was never withdrawn or revoked and it should attract the enhanced cost consequences of such an offer that Rule 49 provides for. The defendants argue that the plaintiffs’ offers should not enjoy the effects of Rule 49 because they were simply an invitation to capitulate rather than true offers of compromise in service of the objectives of Rule 49 (citing: Walker v. York-Finch General Hospital, 1999 CanLII 2158 (ON CA), 1999 CarswellOnt 667, at paras. 70-83 (C.A.) and Gohm v. York, 2014 ONSC 4459, at paras. 5-14). I disagree. The resale value of the subject property was known so the limits of the potential damages were known and there was an element of compromise built into both offers that the plaintiffs made. The defendants were the ones who refused to engage in any settlement negotiations. The plaintiffs should not be expected to negotiate with themselves.

[13] Rule 49.10 provides that if a plaintiff receives a judgment that is more favourable than the offer (which is the case here, my judgment having been for $358,900.00 plus interest and costs and the operative formal Rule 49 offer having been for $315,000.00 plus interest under the CJA), the plaintiff is entitled to partial indemnity costs to the date the offer was served and to substantial indemnity costs from that date, unless the court orders otherwise. I find that the plaintiffs’ June 3, 2019 settlement offer meets all of the criteria of a Rule 49 offer and should lead to the intended effects of that Rule.

[14] As to the quantum of costs, having considered the other Rule 57 factors, the plaintiffs have not conducted themselves in a manner that would cause me to reduce the costs claimed by the plaintiffs in their costs outline. The costs they incurred were generally consistent with the work that was done to address not only the plaintiffs’ onus of proof but also the various issues that the defendants raised in their vigorous efforts to defeat the plaintiffs’ claims and/or avoid or delay the judgment that was ultimately rendered against them. See Stetson Oil v. Stifel Nicolous Canada, 2013 ONSC 5213, at para. 17.

[15] In terms of what the defendants could reasonably be expected to pay in costs if they lost, their reference to their counsel’s accounts has been shown by the plaintiffs not to be reliable. The defendants indicate partial indemnity costs for their counsel who attended on the first appearance to be $8,735.00, whereas their counsel at the time submitted a partial indemnity bill of costs following that appearance indicating $24,871.00 which is three times higher. They have also not included time in their costs outline for certain steps attended by subsequent counsel. It is fair to say that the fees indicated in the costs outline of defendants’ counsel is understated.

[16] That said, even if amounts were added back in so as to account for some of the discrepancies noted, there would still be a fairly large difference in the counsel fees for each side. The plaintiffs’ total fees are in excess of $110,000.00 whereas the defendants are estimated to be in the range of $50,000.00 (even if that is a low estimate, it is less than half).

[17] The principles of indemnity and proportionality are important considerations in arriving at the appropriate amount of costs to award. Rule 57.01(0.a and 0.b) and Boucher v. Public Accountants Council (Ontario), 2004 CanLII 14579 (ON CA), 2004 CarswellOnt 2521, at paras 26 and 28 (C.A.)

[18] The court does not engage in a line by line analysis of time spent by counsel in fixing costs, but the big picture can be instructive. That can include a comparative consideration of the number of lawyers and lawyer hours for the various tasks as well as consideration of the overall amount at issue in relation to the amount of costs claimed. This is not an exact science, but I have taken the defendants’ submissions on these points into account in the exercise of my discretion and my determination that there should be some overall reduction in the lawyer fees in setting the quantum of the plaintiffs’ costs of this action. This is not intended as a criticism of counsel for the plaintiffs but rather a recognition of the need to balance actual time spent with expectations and what is reasonable to require the defendants to pay.

[19] My judgment is a final order that deals with the entirety of the issues in the action and the counterclaim. In the exercise of my discretion under Rule 57 and s. 131 of the CJA, I am fixing the plaintiffs’ costs of this action, including the costs of the summary judgment motion and all related attendances, in the amount of $90,000.00 for legal fees, plus all claimed disbursements and taxes applicable to the fees and disbursements. The defendants are ordered to pay those fees, disbursements and taxes to the plaintiffs.

Kimmel J.

Date: April 23, 2021